Labor Department tests new identity options for accessing unemployment benefits

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The Labor Department plans to cover initial costs for digital and in-person identity proofing offerings for states to use in the unemployment system.

The Labor Department plans to announce new, government-run identity proofing options through the General Services Administration's and a new, in-person option run with the U.S. Postal Service for the unemployment system in June.

The USPS program works in conjunction with software developed by the Labor Department, Andrew Stettner, the Labor Department's deputy director for policy in the Office of Unemployment Modernization, told FCW. 

Applicants for unemployment benefits would present a bar code on a printout or on a personal device that is linked to an individual application. The post office worker then matches the info on the bar code against a government-issued ID. The Labor Department system communicates a match or a mismatch to the state in which the applicant is trying to claim benefits. 

"The advantage is every state does not have to set up their own technical communication with the Postal Service," Stettner said in an interview.

The Labor Department is also testing the government-run system as a means of digital identity verification. A pilot is underway in Arkansas – where the USPS system is also being tested.

GSA’s was launched in 2017 and first became available to state-level programs on a limited basis in 2021.

"There are already a lot of states interested in joining this project," Stettner said. "We've had a good experience for individuals that have valid government ID being able to go through the process."

Fraud in the unemployment insurance system is a longtime problem that spiked during the COVID-19 pandemic. The Government Accountability Office says that at least $60 billion went to unemployment fraudsters from April 2020 to November 2021, although the number is likely higher.

The Labor Department is covering the initial implementation and transaction costs for these two new options with some of the $2 billion in funding for the unemployment system via the American Rescue Plan Act. In recent guidance the department directed states that use digital identity verification to offer at least one non-digital option, something the USPS offering could help states meet.

"There are a lot of fraud threats to the [unemployment insurance] program and having the ability to identity verification is really a strong defense," Stettner said. "We are really just trying to help our state partners come up with good solutions."

Correction: Due to an editing error, the $2 billion in unemployment modernization funding for the Department of Labor was originally reported as $200 billion. The article has been updated to reflect the correct figure.